8
FRIDAY, JULY 1, 1988
DOWN
THAT BANKS COULD FIND HOWEVER, HE SAID, IN VIEW OF THE FACT THAT THEIR RATIOS MOVE UP AND
UNEXPECTEDLY FOR QUITE
REASONS OF "TRIGGER" RATIOS HAD BEEN OFTEN OUTSIDE THEIR CONTROL, A SYSTEM INTRODUCED WHICH WAS SET AT A SMALL MARGIN ABOVE THE MINIMUM RATIO.
OF
THIS LEVEL HE SAID WHEN AN INSTITUTION'S RATIOS DROPPED BELOW
OF IT WAS ASKED TO CONSULT THE OFFICE
THE COMMISSIONER
BANKING STEPS IT WOULD TAKE IN AS TO THE REASONS FOR THE CHANGE, AND WHAT ORDER TO AVOID A BREACH OF THE STATUTORY MINIMUM.
WITH A MEANS DO NOT FALL
IS TAKEN,
"THIS IS TO PROVIDE BOTH THE INSTITUTION AND US OF GUARDING AGAINST THE POSSIBILITY THAT CAPITAL RATIOS TO OR BELOW THE STATUTORY MINIMUM BEFORE REMEDIAL ACTION HE SAID.
SURE "IT IS INTENDED AS A HELPFUL TOOL FOR BOTH OF US, TO MAKE
BEFORE A LACK OF CAPITAL THAT A WARNING LIGHT WILL START FLASHING
* HE ADDED. BECOMES A POTENTIAL THREAT TO DEPOSITORS,
TURNING TO THE
RECENTLY
RELEASED
REPORT
OF THE SECURITIES INTEREST TO REVIEW COMMITTEE, MR NICOLLE SAID ANE AREA OF PARTICULAR
ROLE THE IMPORTANT
WHICH THE HIM HIGHLIGHTED BY THE COMMITTEE WAS
THE IN COORDINATING BANKING SUPERVISOR COULD HAVE
SUPERVISION OF
WHICH COMPRISED BOTH BANKING GROUPS
BANKING AND OTHER FINANCIAL
BUSINESSES.
FOCUSSED
HE SAID THAT AT PRESENT, THE SUPERVISION TENDED TO BE
ONLY LIMITED REGARD WAS ON THE INDIVIDUAL AUTHORISED ENTITIES, AND PAID TO THE REST OF THE GROUP OF WHICH AN INSTITUTION WAS PART.
INSTITUTIONS HAD
HE POINTED OUT THAT BANKS AND DEPOSIT-TAKING OF COURSE DIVERSIFIED INTO A RANGE OF DIFFERENT FINANCIAL ACTIVITIES,
THEY WERE AS A RESULT OF WHICH LARGER FINANCIAL GROUPS.
INCREASINGLY
BEING
LOCATED WITHIN
IN ONE PART OF THE OR DEPOSIT-TAKING
"IT FOLLOWS, THEREFORE, THAT A DISASTER GROUP COULD CAUSE A LOSS OF CONFIDENCE IN THE BANK COMPANY AND EVEN PRECIPITATE A WITHDRAWAL OF DEPOSITS.
HAVE A "IN MY VIEW IT IS MOST IMPORTANT FOR THE SUPERVISOR TO
GROUP BANKING
IN
ΤΟ ORDER
TAKE BROAD VIEW OF A
ACCOUNT OF THE BE APPARENT POTENTIAL RISKS WITHIN THE GROUP WHICH MAY OTHERWISE NOT TO HIM, HE SAID.
SAID
[
THE
THE
ON THE CONSOLIDATED SUPERVISION OF FINANCIAL GROUPS, MR NICOLLE
RECOMMENDED THAT COMMITTEE THE SECURITIES REVIEW COMMISSIONER OF BANKING SHOULD HAVE A PRIMARY ROLE IN SUPERVISING
DEPOSIT-TAKING COMPANIES CAPITAL ADEQUACY AND LIQUIDITY OF BANKS AND WHICH WERE ALSO LICENSED TO DEAL IN SECURITIES.
NUMBER
THE REPORT SUGGESTED THAT WHERE A
OF SUPERVISORY A GROUP IT AUTHORITIES WERE SUPERVISING DIFFERENT ACTIVITIES WITHIN
OVERALL VIEW OF THE WOULD BE IMPORTANT THAT SOMEONE SHOULD TAKE AN GROUP AS A WHOLE.
/"IN MOST